The system is too focused on supporting saving through the accumulation phase, and not focused enough on how it will manage payouts.

Australia's superannuation system is one of the world's least efficient and most expensive and financial disclosure laws aren't working, the Treasury says in its submission to the Murray financial system inquiry.

Of the 15 OECD nations whose pension operating expenses it graphs, Australia's are exceeded only by those of Spain, Hungary, Mexico and the Czech Republic.

In an apparent reference to overcharging, it says principal-agent theory suggests that the separation of the ownership of funds from those who manage them ''opens up the risk that managers rationally maximise their own interests at the expense of fund members''.

Other reasons why Australia's superannuation sector has high costs are its reliance on manual and paper-based back-office systems and the maintenance of legacy computer systems.

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The super system is too focused on supporting saving through the accumulation phase, and not focused enough on how it will manage payouts to growing number of Australians who will be drawing down on their accounts. ''Neither it nor the insurance sector has sufficiently developed a broad range of products for individuals to manage their financial affairs through retirement,'' the Treasury says.

Also, account-based pensions as presently structured do not protect against longevity risks.

''Australia is the only country which relies predominantly on a mandatory privately administered defined-contribution structure for retirement income not to have incentives or mandates in place for longevity insurance.''

Treasury said Australia's financial disclosure laws have reached their limit, being both expensive to administer and of limited use to customers.

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Super system expensive, says Treasury